The Long Tail and the BOP
A lot of people are talking lately about ?The Long Tail,? a concept first put forward by Wired editor Chris Anderson.? (A lot of buzz was generated when his book of the same name was published earlier this month).? The basic idea, as described by Anderson, is that business is ?increasingly shifting away from a focus on a relatively small number of ’hits’ at the head of the demand curve and toward a huge number of niches in the tail.?? BOP enthusiasts–does this sound familiar? ?
Well, you?re not the only ones who think so.? I ran across a couple of older posts on Anderson’s Long Tail blog in which he discusses the Base of the Pyramid hypothesis in the context of the long tail.? For instance, he observes that,
Both theories are based on the notion that if you break the economic and physical bottlenecks of distribution you can reach a huge, previously neglected market. They both recognize that millions of small sales can, in aggregate, add up to big profits. And they’re both focused on ways to lower the cost of providing goods and services so that you can offer them at lower price point while still maintaining margins.
When he gets down to it, though, Anderson believes that the long tail and the BOP are fundamentally different–that the BOP is about increasing the size of the mass market to include low-income customers and producers, while the long tail is about serving increasingly nicheified markets:
So the Long Tail is made up of millions of niches. The [Base] of the Pyramid is made up of mass markets made [from] even more mass.? Both lower costs to reach more people, but they do so in different ways for different reasons. They’re complimentary forces, but fundamentally different in their approach and aims.
I tend to agree with Anderson, more or less.? Of course, since his primary (sole?) source for BOP info is Prahalad, he sees the BOP theory as consumer-first, rather than as balanced between the BOP as consumer and the BOP as producer.? Despite this minor flaw, however, I think Anderson does a good job.? Check out the rest of his excellent blog for more on the long tail.